Biogen Tumbles On Citi Downgrade

By Teresa Rivas

Biogen Idec (BIIB) was slumping 6% in recent trading, after a downgrade from Citi.

This morning, analyst Yaron Werber cut Biogen from Buy to Neutral, citing concerns about the company’s multiple sclerosis drug Tecfidera, as well as the stock’s valuation following a recent run.

Shares are trading above 20 times forward earnings, even with today’s slide.

Werber notes that while he remains confident about Tecfidera and predicts upside to current consensus estimates of U.S. sales, he sees “risks that the European Medicines Agency (EMA) will not provide regulatory data protection (RDP) for Tecfidera. This could lead to generic challenges that could pressure pricing, market share, and jeopardize the long-term outlook. As Biogen is already trading at a high P/E multiple that reflects expectations for upside (not downside) surprises, we would rather move to the sidelines.

“We will look for a better entry point to get constructive again either when the outlook in Europe improves or if the stock corrects. European sales account for ~36% of long-term consensus estimates for Tecfidera. We see downside risks to these ests and expect to get clarify on the RDP status in H2:13.”

He writes that Celgene (CELG), which recently reported positive news about its psoriasis drug and upped its stock repurchase plan, and Gilead (GILD) look like better deals for investors.

June has been a rough month for Biogen so far, but the shares are still up more than 66% in the past year, easily outpacing the broader market.

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